Case study - Natalie
Background
Natalie is a single parent. She is returning to the workforce after a period looking after her young child. Because of the location of her new employment, she needs to buy a car for transport.
In the past, Natalie's former partner managed all the household finances, now she has to make the decision about how to finance the purchase of the car. She has insufficient funds to buy it outright.
Natalie comes to you for advice on credit and the best way to finance the purchase of the car. It is likely to cost about $15,000. She would prefer to obtain finance for the whole amount. Assume that her income will be sufficient to cover the repayments.
After reading the case study above, answer the questions below.
Project tasks
Task1 Establishing level of financial knowledge
What communication skills might you use to establish and confirm Natalie's level of knowledge about credit and finance and to establish her needs?
Task 2 Offering financial options
What type of credit options would you suggest to Natalie and why?
Your answer should include a comparison of two (2) credit options and a recommendation of one (1) option with reasons for the recommendation.
Task 3 Explaining financial options
Provide a simple explanation of the difference between a secured loan and an unsecured loan to Natalie for the purpose of her loan?
Include in your explanation the implications of taking out a secured loan?
Task 4 Explaining finance costs
Provide Natalie with a summary of potential fees and charges that might be applicable to the credit option you have suggested, and explain how she can compare the real cost of loans offered by different credit providers. Include an explanation of why your suggestion is likely to provide an indication of the real cost.
Task 5 Impact of credit history
Natalie tells you that her former partner failed to properly meet their credit card debt obligations before they parted. Although Natalie eventually repaid the debt, she is afraid that this incident may count against her when she applies for a loan.
What would you say to Natalie about the records kept by credit reporting agencies, their use and her rights regarding her access to the information held?